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Wealthfront turns to Frank Quattrone to spur sale after RBC and SPAC deals fall through, say RIABiz sources, but reported $1.5 billion price may be bridge too far

Though buyers are interested in the Palo Alto, Calif. -headquartered robo, they may have balked at the price, which sources say pushes the envelope even in a hot market, but banker Catalyst will further test the market.

Wednesday, November 17, 2021 – 2:29 AM by Brooke Southall
Andy Rachleff will try to sell his $25-billion robo-RIA for $1.5 billion, a report says

Wealthfront has hired Quatalyst Partners to find a buyer after a couple more home-cooked deals fell through, according an RIAbiz fintech source who asked not to be identified.

The Palo Alto, Calif.-based robo-advisor could be on the block for as much as $1.5 billion, Bloomberg reported today. That's about triple where it was valued the last time it did a major cash raise in 2018.

The general listing with Frank Quattrone's San Francisco investment bank follows a year of various attempts to sell the company including a promising deal with RBC that didn't pan out, the source says. See: Advent Software is for sale, with Frank Quattrone as the sales agent, reports say

RBC already does clearing and custody for Wealthfront. Before the RBC deal, Wealthfront was approached by a series of special acquisition corporations (SPACs) to do a reverse merger to create a publicly traded company, the source adds.

Wealthfront co-founder Andy Rachleff apparently found the SPACs distasteful but then aligned with one he considered reputable, says the RIABiz source. But the one that fit Rachleff's taste had its funding dried up.

"You name the SPAC, and they approached Wealthfront," adds the source, who asked to remain anonymous to speak candidly. 

RIABiz reached out to Wealthfront late in the editing process and will add comment should it come in. Wealthfront didn’t respond to Bloomberg's requests for comment. 

Multiple pivots

Wealthfront has also been shopped to wirehouses and major banks without success to date. The price in that scenario was reportedly $1.3 billion.

Wealthfront will remain independent if no good deal materializes, according to the Bloomberg article.

It has raised about $205 million in its history; the last raise in 2018 for $75 million valued the company at about $500 million. Wealthfront's AUM has was about $9.5 billion at the time, See: With hedge fund help, Andy Rachleff buys Wealthfront $75 million of time and swaps out 'robo-advisor' moniker he reviles for his own coinage

Wealthfront has pivoted on average every other year since its original founding as KaChing going back to 2008. See: Wealthfront, in its sixth pivot as a firm, reduces its robo-advisor's role and puts 'decision-making power where it belongs,' with retail investors

Most recently, it began to move away from pure robo-advice to a platform that allows investors to be more self-directed -- more like M1 and Robinhood.

Aggressive fundraising

Also like Robinhood, it began to provide access to cryptocurrency, albeit through an expensive middleman in Grayscale. See: Wealthfront cedes to four years of investors clamoring for crypto by taking on expensive third-party vendor that Betterment rules out

Its big rival continues to be its original rival, Betterment, which manages about $32 billion and has been aggressive in raising capital and modifying its business model toward RIA custody and 401(k) recordkeeping.

The New York City robo-advisor has more than 375 workers. See: Betterment is ready to burn cash like its 2008 all over again with 2008 co-founder Eli Broverman leading a $60-million VC round to execute the plan he was credited with creating

Wealthfront's ADV filed two weeks ago says it manages $25 billion and employs 240 staff.

Related Moves

Wealthfront's unlikely tapping of Sheila Bair and Tom Curry signals likely push to gain a bank charter, analysts say

The Redwood City robo-advisor's addition of two renowned former chief banking regulators brings legitimacy and guidance that could lead to a margin-fattening bank charter and help solve the robo-advisor's problem of high client acquisition costs.

December 31, 2020 – 4:37 AM

Wealthfront cedes to four years of investors clamoring for crypto by taking on expensive third-party vendor that Betterment rules out

The Redwood City, Calif., robo-advisor turned a hard 'no' into a soft 'yes' by dealing with Grayscale and its 200 basis-point-plus fees, which its robo rival in NYC -- also without a crypto path -- finds ludicrous.

August 14, 2021 – 2:20 AM

Oisín's Bits: Wealthfront drops old mission statement, declares war on institutions and emphasizes banking future • Seeking Utah charter, Edward Jones may become largest bank in US by branch count • After Advent chief leaves, Black Diamond head steps up

Andy Rachleff cans the old 'democratizing' mission statement at his robo; The 14,200 one-man Ed Jones branches may become branch banks; Steve Leivent consolidates power at SS&C.

July 3, 2020 – 1:12 AM

Mentioned in this article:

Portfolio Management System
Top Executive: Andy Rachleff

Jeff Spears

Jeff Spears

November 17, 2021 — 11:59 AM
Looks like someone needs to call traveling.

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